Undugodage v. Rasanathan
SUPREME COURTATUKORALE, J.
A. G. DE SILVA J. AND JAMEEL, J.
S.C. RULE NO. 1 OF 1987.
JANUARY 16, 17 AND FEBRUARY 3, 1989
Attorney-at-law – Rule to show cause against suspension or removal – JudicatureAct, Section 42(2) – Misappropriation of money paid by a co-mortgagor in amortgage suit – Finding of Disciplinary Committee of Bar Association and DistrictJudge.
It was alleged that the respondent attorney-at-law had:
Received a sum of Rs. 30,000/- in settlement of the balance principal sum on thedecree but not paid it to the complainant.
Borrowed Rs. 12,000/- on a promissory note from the complainant while she washis client and improperly appropriated the same to his use.
The Disciplinary Committee of the Bar Association inquired into the first allegation. TheDistrict Judge too made findings on the question of payments in satisfaction of thedecree. The findings were adverse to the respondent attorney-at-law. The DisciplinaryCommittee did not inquire into the second allegation.
The court is under a duty to examine and determine the issue untrammelled by thefinding of the learned Distict Judge.
Sri Lanka Law Repons
1)989) 2 Sri LR
The significance of a letter by the respondent informing the co-mortgagor thatinterest amounting to Rs. 10,000/- was due which refutes .his claim to have paidRs. 30,000/- on a receipt earlier in date to this letter was not considered by theDisciplinary Committee.
The District Judge misdirected himself in regard to this letter. This letter proves therewas no misappropriation.
The second allegation had not been inquired into by the Disciplinary Committeeand the respondent had no opportunity of establishing that he appropriated theloan as fees with the consent of the complainant in which event it would be verydoubtful whether his conduct could be deemed to be improper.
Per Atukorale, J.
"We …. were, very regretfully, denied on this occasion that assistance from the BarAssociation of Sri Lanka which we would normally expect in a proceeding of thisnature initiated at its own instance and which has, in the past, unerringly beenextended to us and which we have always appreciated and valued so much. It isindeed unfortunate that the Bar Association was, except at one sitting, unrepresentedbefore us and we were thereby deprived of the benefit of its views and submissions."
“Upon those facts as they stand, it would doubtless appear to be most improper tor anattorney-at-law who has obtained from his client a sum of money as a loan toappropriate the same unilaterally as against fees alleged to be due to him (orrendering professional services. Such conduct on the part ot an attorney-at-law would,to say the least, constitute the clearest instance of a malpractice within the meaning ofS. 42(2) of the Judicature Act. It may suffice to warrant his removal from officealtogether".
RULE against attorney-at-law under S. 42(2) of the Judicature Act, No. 2 of 1978.
Rohan Jayatilleke, Deputy Solicitor-General with Ananda Kasturiaratchi, State Counselin support of the Rule
M. Kanagaratnam with G. Kumaralingam, R. Kadiravelpillai and Miss. N.A. Jaya-wickrema for the respondent.
Desmond Fernando for the Bar Association.
Cur. adv. vull.
March 23, 1989.
A Rule has been issued on the respondent under s. 42(3) of theJudicature Act, No. 2 of 1978, to show cause why he should not besuspended from practice' or removed from the office of anattorney-at-law of the Supreme Court in terms of S.42(2) thereof. Ithas originated in consequence of a written complaint by way of anaffidavit made on 21.8.1984 by Mrs. Genevieve Clotilda Undugodagenee de Silva (hereinafter referred to as the complainant) to the Chief
SCUndugodage v. Rasanalhan (Alukorale, J.)163
Justice containing solely an allegation of misappropriation of moniestotalling ‘around Rs. 70,000/- to Rs. 80,000/- or more’ said to havebeen received by the respondent from the defendants in action No.10884/MB of the District Court of Colombo and 'proved to have beenmisappropriated’ by the respondent. On the directions of the ChiefJustice a preliminary inquiry into this complaint was held in terms ofS.43(1) of the aforesaid Act by a disciplinary committee (hereinafterreferred to as the committee) of the Bar Association of Sri Lanka.After inquiry the committee in its report of 12.11.1986 held, inter alia,that the respondent had, on stamped receipts C7, C8 arid C10 (not.C9 as mistakenly stated in the report) signed by him, acknowledgedreceipt of 3 sums of Rs. 20,000/-, Rs. 20,000/- plus one – year’s .interest (Rs. 3600/-) and Rs. 20,000/- respectively, out of which hehad failed to reimburse the last two sums to his client, thecomplainant. Hence the committee recommended that appropriateaction be taken against the respondent under s. 42 of the said Act.Upon a consideration of this report this court directed the Rule to beissued on the respondent.
Admittedly the complainant was the plaintiff in the aforesaid actionwhich was filed on her behalf by the' respondent against thedefendants (the co-mortgagors) on 10.8.1967 putting the mortgagebond C1 dated 27.9.1964 in suit for the recovery of the principal sumof Rs. 50,000/- and arrears.of interest in a sum of Rs. 4500/-; decreewas entered in favour of the complainant on 16.6.1969 ordering thedefendants to pay her the principal sum with interest thereon at 9%per annum from 1.6.1969 till payment in full; the order to sell was, interms of the decree, not to issue for a period of 3 years unless therewas default in payment of interest for 2 months in, which event thecomplainant was entitled to obtain order to sell without notice;another bond (C2 dated 11.6.1969 – a few days prior to the enteringof the decree) was executed by the defendants for a sum of Rs.11,000/- being the arrears of interest then due on the original bondCl; according to receipt C7 dated 11.9.1973 stamped and signed bythe respondent the amount then due in, the said action was Rs.30,000/- with interest payable from 12.9.1973 at 12% and therespondent had received and paid to the complainant’s attorney(Mendis) a sum of Rs. 20,000/- out of the capital sum decreed in thesaid action.
In its report the committee points out, quite rightly, that the crux ofthe complaint against the respondent is that although the balance
Sri Lanka Law Reports
119691 2 Sri LR
capital sum of Rs. 30,000/- with interest thereon had been paid to therespondent by Asoka Madanayake, the son of the co-mortgagors, thesame had not been paid over by him to the complainant. Thecommittee found as a fact that upon document C8 (which it held wasa receipt) the respondent has acknowledged payment to him byAsoka Madanayake of a sum of Rs. 20,000/- and interest for a periodof one year. It rejected the respondent's version that C8 was a letterissued by him at the request of Asoka Madanayake to enable him toobtain a loan from the State'Mortgage Bank or other institution andheld that it was issued by him because he received payment of theamounts specified therein. The committee in the penultimateparagraph of its report concludes:
“In the result, we are more than convinced that C7, C8 and C9were receipts for payments made to the respondent and whichthe respondent had not reimbursed the complainant. It isregretted that the respondent should have resorted to thisconduct at this stage of his career/’
The written complaint made to the Chief Justice by the complainantwas referred to the respondent for his observations. In hisobservations he states that in or about the year 1976 a sum of Rs.30,000/- and interest from 1976 were due to the complainant. Heapplied for an order to sell, notice of which was ordered to issue onthe defendants. They filed no objections but got the matter fixed forinquiry. At the inquiry Asoka Madanayake, the son of the defendants,appeared and produced 4 letters before the learned District Judge.The respondent proceeds to state that he gave evidence that nomoney was paid to him and that the full sum of Rs. 30,000/- andinterest was due from the defendants. The learned District Judge,however, disbelieved his evidence. He states that he then appealedagainst this order but by some misfortune he had overlooked to file apetition of appeal within 60 days as a result of which the appeal wasdismissed. He reiterates that he never received the said Rs. 30,000/-from the defendants or from Asoka Madanayake. In the affidavit filedin response to the Rule issued on him he states that AsokaMadanayake, taking advantage of an erroneous finding of the learnedDistrict Judge and a technical defect in the processing of the appealresulting in its rejection as well as the view expressed obiter by theCourt of Appeal that it is not disposed to interfere with the finding ofthe learned District Judge, has deceived the complainant intobelieving that he had paid to the respondent the monies due to her.
Undugodage v. Rasanathan (Atukorale, J.)
The respondent referring to the findings of the disciplinary committeestates inter alia, that it had signally failed to consider his defence andto study or analyse the accounting relevant to the matter in issue.
A perusal of the order of the learned District Judge shows that thedefendants in support of their claim that the full amount due on thedecree was paid to the respondent, whilst not adducing anyevidence, produced 4 documents, namely C7, C8, C9 and C10, all ofwhich were admittedly signed by the respondent – C7 and C10 beingso signed on a stamp and C8 bearing an additional signature of hison a stamp on a ^ide. In his order the learned Judge states that therespondent in his evidence admitted that C7 was issued by himcorrectly and that as stated therein a sum of Rs. 30,000/- being thebalance amount (or rather, as conceded before us, the balanceprincipal) due on the decree together with interest at 12% per annumfrom 11.9.1973 was outstanding as on the date of C7, i,e. as on
Referring to C8 the learned District Judge rejects theevidence of the respondent that it is not a receipt for the payment of .money but is only a letter issued to Asoka Madanayake at hisrequest to be submitted to the State Mortgage Bank confirming thepayment already made (as evidenced by C7) of a sum of Rs.20,000/- and interest for one year. Referring to C9 dated 24.4.1976signed by the respondent in which he states that the arrears ofinterest amount to Rs. 10,000/- and requests Asoka Madanayake tosettle the same early, the learned Judge observes that it cannot betreated as a document relating to payment or non-paymentNof money.Referring to C10 dated 8.5.1976 in which the respondent states thatthe capital paid is only Rs. 20,000/- and requests Asoka Madanayaketo make note of the same, the learned Judge again rejects theevidence of the respondent that it is a letter given to AsokaMadanayake for the purpose of making an application to the StateMortgage Bank. He holds that at the time that C10 was issued thebalance (capital and interest) outstanding was not more than Rs.20,000/- and that since it) has been signed on a stamp by therespondent it must be accepted as a receipt for the entire sum thendue. Hence the learned Judge concludes that on C7, C8 and C10 thedefendants have paid the respondent the full amount due on thedecree and directed that satisfaction of decree be entered. It seemsto me that this conclusion is based primarily upon the view formed bythe learned Judge that C7, C8 and C10 are all stamped documentssigned by the respondent and as such they cannot but be construed
Sri Lanka Law Repons
11989/ 2 Sri LR
as receipts for payments made to him. The Court of Appeal,upholding a preliminary objection to the maintainability of the appeal,ruled that the appellant should have first obtained leave to appealfrom that Court and that as no such leave had been obtained theappeal must be dismissed. By way of a reference to the merits of theappeal the Court observed that it is not disposed to interfere with thefinding of the learned District Judge. Accordingly the appeal wasdismissed.
At the hearing before us we had the advantage of the submissionsof learned Deputy Solicitor-General who appeared in support of theRule as well as of learned Counsel appearing for the respondent butwere, very regretfully, denied on this occasion that assistance fromthe Bar Association of Sri Lanka which we would normally expect ina proceeding of this nature initiated at its own instance and whichhas, in the past, unerringly been extended to us and which we havealways appreciated and valued so much. It is indeed unfortunate thatthe Bar Association was, except at one sitting, unrepresented beforeus and we were thereby deprived of the benefit of its views andsubmissions.
In pursuance of an indication given by this court to counsel on anearlier date that it proposes, in the instant case, to follow the normalpractice and procedure pertaining to Rule inquiries of a similar natureto which learned counsel agreed, the hearing before us proceeded onand was confined to the evidence (both oral and documentary)recorded before the disciplinary committee. The crucial issue thatarises for our determination is whether, as maintained by AsokaMadanayake and held both by the District Court and the committee,the respondent did receive from Asoka Madanayake the sum of Rs.30,000/- referred to in C7, being the balance principal sum due onthe decree. A matter which caused us some concern at the hearingand upon which we desired very much a full and complete argumentrelated to the question as to the nature and effect of and/or theweight to be attached to the finding of the learned District Judge(which stands unreversed) that full payment has been made to therespondent in satisfaction of the decree as evidenced by C7, C8 andC10. Learned Deputy Solicitor-General submitted that the finding of• the learned Judge is only of some evidentiary value and is notbinding or conclusive on the issue arising for our determinationLearned counsel for the respondent seemed to take the view that the
Undugodage v. Rasanathart (Atukorale,
question of payment or non-payment to the respondent is one thatwould arise for determination afresh in these proceedingsindependent of the finding of the learned Judge and that it is open to 'the respondent on the material before us to re-agitate the questionand to show that the finding of the District Court (though final inrespect of proceedings before it) is erroneous and untenable.
Considering the submissions made to us on this point by bothcounsel and the fact that the proceedings in the District Court aredifferent in nature, scope and purpose from those pending before usas well as the circumstance that the Rule issued by this court hasbeen based solely on the evidence before the committee and notupon the material placed before the learned District Judge, I am ofthe view that we are free and, indeed, under a duty to examine anddetermine this vital issue untrammelled by the finding, of the learnedDistrict Judge.
Upon a careful assessement of all the material before us and aconsideration of the submissions of learned counsel I have reachedthe. conclusion that it is unsafe to hold that C8 and C10 are receipts..issued by the respondent in acknowledgment of the paymentsalleged to have been made to him by Asoka Madanayake. C7 whichis signed by the respondent on a stamp is in two parts: In the firstpart it acknowledges the payment by Asoka Madanayake of allamounts due on two bonds in full settlement. In the second part itstates that the amount now due on case No. 10884/MB of the DistrictCourt of Colombo is Rs. 30,000/- with interest at 12% from
By contrast C8 and C10, though bearing the respondent'ssignature on stamps, are on their face in the form of lettersaddressed to Asoka Madanayake informing Asoka Madanayakeprimarily of the capital sum paid by him. Whilst C8 informs him thathe has paid Rs. 20,000/- out of the capital, C10 informs him that thecapital he has paid is Rs. 20,000/- only which he is requested tonote. Both refer to case No. 10844/MB aforesaid. Thus the contentsof documents C7, C8 and C10 read together as a whole tend tosupport the respondent’s position that out of the capital of Rs.50,000/- due on the decree only a sum of Rs. 20,000/- has beenpaid.
The construction placed by the learned District Judge on C10,namely, that the sum of Rs. 20,000/- mentioned therein denotes thebalance capital and interest due i.e., the entire balance outstanding
Sri Lanka Law Reports
P9891 2 Sn LR
on the decree, appears to me to be in the teeth of what is statedtherein and therefore unacceptable. Quite aparl from the fact that onthe face of the document C7, C8 and C10 there is nothing to suggestthat they are separate receipts, each for a capital sum of Rs. 20.000/-in which event the capital paid would exceed the capital decreed,even on the construction placed by the learned District Judge on CIOthat the sum of Rs. 20,000/- specified therein constitutes the entirebalance by way of capital and interest, there would have been anoverpayment by Asoka Madanayake of either a sum of Rs. 4664/- asshown in the statement X1 or a sum of Rs. 5000/- as shown in thestatement X2 or a sum of Rs. 4032.59 cts. as shown in the statementX3, depending on the mode the alleged payment of Rs. 20,000/- onC10 is set off. It is hardly likely that Asoka Madanayake would havepaid any sum in excess of what was due on the decree. Moreoverthere has been no evidence placed either before the learned DistrictJudge or the committee of the means or capacity of AsokaMadanayake to have effected the alleged payments on C8 and C10.It became very necessary to adduce such evidence particularly inview of the suggestion made to Asoka Madanayake in the course ofhis evidence before the committee that he was uttering a falsehoodwhen he stated that he paid the balance capital of Rs. 30,000/-. Butthe most vital document in this regard is, in my view, document C9dated 24.4.1976 written by the respondent just two weeks beforeC10. It is, as stated earlier, a letter sent by the respondent to AsokaMadanayake informing him th'at the arrears of interest in case No.10884/MB is Rs. 10,000/- and requesting him to settle the sameearly. When questioned on this document Asoka Madanayake, in hisevidence before the committee, admitted that the respondentcalculated and showed him and that he was satisfied that the interestoutstanding was about Rs. 10,000/-. This admission of AsokaMadanayake is irreconciliable with his position of having made anypayments on C8 and C10. It effectively refutes his allegation ofhaving made any payment either by way of capital or interest after
the date of C7 and discredits his case altogether.Unforunately the learned District Judge does not appear to haveappreciated its significance or impact on the issue before him whilstthe committee, apart from a mistaken reference to C9, has totallyfailed to pay any attention or regard to its contents. Whilst thelearned Judge has misdirected himself in regard to C9 thedisciplinary committee has not even addressed its mind to it. Itherefore hold that the respondent has not received any money on
Undugodage v. Rasanathan (Atukorale, J.)
documents C8 and C10. Accordingly I find that there has been nomisappropriation of monies as alleged in the Rule.
The only other matter that remains for our consideration upon thesubmissions made to us by the learned Deputy Soljcitor-Generalrelates to the charge that the respondent haying borrowed a sum ofRs. 12,000/- on promissory note C23 from the complainant whilst shewas his client ‘improperly appropriated’ the same to his use. In heraffidavit of complaint sent to ihe Chief Justice the complainant makesno complaint or mention of such improper conduct on the part of therespondent. Nor does she in her evidence before the committeemake any reference thereto. Nor is there a consideration of thematter or a finding thereon by the committee in its report. The chargeappears to have been formulated upon certain answers given by therespondent under cross-examination during the final- stages of theinquiry before the committee wherein he stated that the sum was aninterest-free loan ..obtained by him from the complainant; that forsuccessfully reducing the assessment of the complainant’s deceasedhusband’s estate from Rs. 217,000/- to Rs. 17,000/- the complainantoffered him a certain sum as fees which, except for a sum of Rs.5,000/-, he did not receive and that the amount of the loan was setoff by way of fees. Upon these facts asjhey stand, it would doubtlessappear to be most improper for an attorney-at-law who has obtainedfrom his client a sum of money as a loan to appropriate the sameunilaterally as against fees alleged to be due to him for renderingprofessional services. Such conduct on the part of an attorney-at:lawwould, to say the. least, constitute the clearest instance Of amalpractice wiihin the meaning of S.42(2) of the Judicature Act. Itmay suffice to warrant his removal from office altogether. It Was,however, tenaciously urged by learned Counsel for the respondent-that as this alleged act of misconduct on the part of the respondent,did not form the subject matter of inquiry before the. disciplinarycommittee, that as the complainant herself did not at any time makecomplaint to any one of such misconduct and that as the committeeitself did not think it necessary to pursue this matter although ittranspired during the course of its inquiry, the respondent has beengravely prejudiced with regard to this matter since he has beendeprived of the opportunity of establishing that the complainant had,expressly or impliedly, consented to the arrangement of setting offthe loan as part of his fees. Urging further that the material placedbefore us is very meagre and insufficient to substantiate this charge,
170Sri Lanka Law Reports(1989] 2 Sri LR
learned Counsel submitted that in the context of the specialcircumstances pertaining thereto no finding adverse to his client bemade by us. I am in entire agreement with the submissions oflearned Counsel. Until the present rule was issued on him therespondent • had no intimation whatsoever that the-propriety of hisconduct in this regard was going to be challenged. He has, thus, hadno opportunity of establishing before the committee his defence (thathe appropriated the loan as fees with the consent of the complainant,in which event it would be very doubtful whether his conduct could bedeemed to be improper. The silence and inaction of the complainantin this respect suggest that she at least acquiesced in, if notconsented to, the arrangement alleged by the respondent. As such Ido not think it. is proper or possible for us to reach a finding adverseto the respondent on this charge.
For the above reasons the Rule issued, on the respondent, isdischarged.
A. G. de SILVA, J. – I agree.JAMEEL, J. – I agree.
UNDUGODAGE v. RASANATHAN